The STOXX 600 <.STOXX> index rose 1.1 percent, having earlier lost as much as 0.3 percent following the release of figures showing U.S. consumer prices rose more than expected in January, bolstering expectations for faster interest rate hikes.

Similar expectations sparked a heavy sell-off last week but the pan-European index managed to reverse course and hit a four-day high on Wednesday, as Wall Street showed a muted reaction to the U.S. figures. The European index however remains down 3.8 percent so far this year.

Data out of Germany earlier in the day showed Europe's biggest economy was set to power ahead in 2018, while a Thomson Reuters study said fourth-quarter European earnings growth expectations were revised upwards after 15 weeks of downgrades.

One Milan-based trader said barring a major stock market correction, he was confident European equities could outperform Wall Street given monetary policy in the euro zone was still expansionary.

Other investors however appear to be betting on a heavy pullback in equities after years of strong gains. Bridgewater Associates was reported to have taken short bets against major German companies Deutsche Bank <DBKGn.DE>, Allianz <ALVG.DE>, and BASF <BASFn.DE>.

Those three stocks all ended higher.

Top gainer on the STOXX was silicon wafer group Siltronic <WAFGn.DE>, up 7.9 after a positive note from Credit Suisse.

Second was French electrical parts distributor Rexel <RXL.PA>, which rose after a trading update.